Shipment difficulties from South America pressured on copper concentrate TCs

SHANGHAI, Feb 3 (SMM)—In January, the SMM copper concentrate index stood at $46.00/mt, an decrease of $2.74/mt from the previous month. As of January 29, the SMM copper concentrate index stood at $43.85/mt, a month-on-month decrease of $2.32/mt.

Spot prices trended higher after the settlement of the TC benchmark in December 2020 amid optimistic expectations for the increment of copper concentrate in 2021 and maintenance at South Korean smelters. Besides, the increase in TCs for forward-month also verified the market's expectations for the ease of supply and demand.

 However, South America saw many shipment difficulties in January 2021. Las Bambas encountered community roadblocks in mid-December, and its impact on the mines exceeded market expectations. It was not until mid-to-late January that it reached an agreement with the community to start shipping cargoes. Chilean ports were faced with waves in January which were concentrated in the northern ports. The shipments of large copper mines such as Escondida and Chuquicamata were affected from the waves. Some smelters reported that the shipments of Chilean concentrates have been delayed for one month. While the weather disturbance in Chile continued, the Peruvian government announced a second round of lockdown to control the pandemic. From January 31 to February 14, Lima and 9 regions will have been shut down, including Las Bambas, Cerro Verde Large and Antamina and other large copper mines, of which Las Bambas is particularly disturbed due to the need for automobile transportation.

The shipping schedule problems in Chile and Peru have caused a certain structural gap in the supply of concentrates, which has led to an increase in the demand for restocking at domestic smelters, which is the main reason for this round of TC downward trend.

Copper ore imports in December low, subsequent imports to be affected by shipping issues in South America

In December 2020, China imported 1.88 million mt of copper concentrate, up 2.93% month-on-month but down 2.28% year-on-year; China imported 21.79 million mt of copper concentrate in 2020, down 1.07% month-on-month.

China imported 7.72 million mt of copper concentrate from Chile in 2020, the largest importer, flat from 2019. As the backbone of the economy, Chile's mining industry still maintains normal production when the domestic Covid-19 situation was worsening. According to Cochilco, output of copper ore is expected to stand at 5.8 million mt in metal content in 2020, slightly higher than in 2019.

The largest import reduction in 2020 comes from Peru. China’s imports from Peru fell 19% to 4.82 million mt in 2020 due to the sharp decline in its output from March to June, and community roadblock protests.

In December 2020, China’s imports of copper concentrates from Australia fell to 0 mt. Imports of copper concentrates from Australia declined 24 percentage points to 794,000 mt amid the tension between China and Australia. Yangshan copper concentrate tightened further amid the lack of supplements from Australian ore and tight supply. 

Copper concentrate imports in Q1 2021 are expected to be below 2 million mt due to shipping problems in Peru and Chile and delayed shipping schedule.